If you’ve been searching MLS listings for any length of time, you’ve likely noticed home prices fluctuating from week to week. Multiple factors cause prices to move in your local market which drives pricing changes and helps a savvier homebuyer when evaluating MLS listings. The biggest factor affecting home prices is the current real estate inventory. When inventory is low compared to buyer demand, prices tend to rise through bidding wars. When inventory is high, buyers have more negotiating power to lower prices. Track MLS data on new listings coming to market, total active listings, and days on the market. Adjust your negotiating approach depending on whether your target area currently favors buyers or sellers.
Mortgage rates directly impact the budgets of prospective buyers. When rates are low, buyers qualify for higher loan amounts and bid prices upward. Rising rates shrink buying power and place downward pressure on prices over time. Pay attention to rate movement and factor it into listing prices. Homes priced based on peak low rates may languish when buyers no longer afford them at current rates. Rates impact both list prices and final sale prices. The overall economy also influences housing demand. A strong economy with low unemployment, solid wages, abundant jobs, and consumer confidence encourages major home purchases. Weaker economic conditions discourage big-ticket spending. MLS homes often sell for higher prices when the broader economy thrives vs. during downturns or recessions.
Not all neighborhoods appreciate equally. Where demand emerges strongly in a specific area, values accelerate above the overall market. They are target neighborhoods with new construction, renovations, infrastructure improvements, or other perks drawing eager homebuyers. On the flip side, locations with rising crime, declining school rankings, or deteriorating community amenities see weaker demand. Updated area preferences continually shuffle MLS pricing.
Top-notch schools drive up the prices of homes in surrounding school zones. Savvy buyers search MLS listings filtered by school district and cross-reference rankings. Homes zoned for newer, higher-rated schools typically command premium prices. Falling school ratings quickly result in lower demand for homes in that zone, as parents re-evaluate options. Changing school fortunes alter pricing.
Natural disasters like floods, wildfires, or tornadoes immediately impact MLS values for at-risk homes. History of damage or ongoing threat risks drops demand. Conversely, unaffected areas nearby often boom as buyers seek safer zones. Disasters reshape pricing dynamics overnight in impacted regions.
Major employers provide both jobs and community prestige. Buyers compete for homes near big corporate headquarters and employment hubs. When large companies expand or relocate, real estate MLS ripple effects follow. Conversely, when key employers downsize or leave affiliated homes often take a hit to values. The MLS reflects corporate shifts as buyer demand follows.
No market exists in isolation. Pay attention to how these home value drivers intersect in your submarkets of interest. Understanding what moves pricing better positions you to evaluate appropriate listing prices and negotiate on your offers. With knowledge of what impacts values locally, you can leverage factors that support your buying goals in the MLS marketplace.